SWFs ♥ Infrastructure

Ashby Monk

Preqin has just released its annual survey of SWFs’ investment activity. While the main story seems to be that SWFs’ assets under management are up 11 percent to $4 trillion, the real interesting nugget is the extent to which SWFs are refocusing their investment operations towards the long term.

Apparently, the percentage of SWFs with infrastructure mandates shot up from 47 percent a year ago to 61 percent today. That seems to be a remarkable jump. Granted, they don’t offer much in the way of details on the sample size or the survey stats in the free teaser. However, the other asset classes covered by the report had much smaller changes — real estate was up 5% and private equity was up 4% — which suggests that SWFs are in fact significantly increasing their infrastructure allocations relative to other assets.

Now, I’ve been arguing for some time that SWFs are uniquely matched to this specific asset class, so this shouldn’t come as too big of a surprise. Still, it’s noteworthy to see these funds finally taking these long-term, illiquid asset classes seriously. SWFs seem to be recognizing the comparative advantages they have over other (private) investors in this domain. It’s about time.

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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